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F ederal r e se r v e Bank o f Dallas
DALLAS. TEXAS
75222
Circular No. 80-240
December 22, 1980
AMENDMENTS TO REGULATION D
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
TO THE CHIEF EXECUTIVE OFFICER
OF ALL FINANCIAL INSTITUTIONS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
There is printed on the following page the text of a press release
issued on December 8, 1980, by the Board of Governors of the Federal Reserve
Sytem announcing the amendment of Regulation D with respect to the period
during which a limited number of telephone or preauthorized transfers can be
made in an account without causing the account to become subject to a reserve
requirement on transaction accounts.
Specifically, the Board has amended the regulation to provide that
the term "calendar month" includes any statement cycle or similar period of at
least four weeks for purposes of the three permissible transfers. In addition, the
Board made a number of technical changes to Regulation D in the nature of
clarifications and corrections of minor errors.
A copy of the amendments will be provided in the near future for
insertion in the Regulations Binder furnished by this Bank. In the interim, you
should refer to the enclosed Federal Register document for the full text of the
amendments.
All questions should be directed to William Green at the Dallas
Office, Ext. 6394; Larry Wilson, El Paso Office, (915) 544-4730; Rodney Franklin,
Houston Office, (713) 659-4433; or Leonard Briggs, San Antonio Office, (512)
224-2141.
Sincerely yours,
Robert H. Boykin
First Vice President
Enclosure
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FEDERAL RESERVE press release
For immediate release
December 8, 1980
The Federal Reserve Board has amended its Regulation D — Reserve
Requirements of Depository Institutions — with respect to the period during
which a limited number of telephone or preauthorized transfers can be made
in an account without causing the account to become subject to a reserve
requirement on transaction accounts.
Before revision, Regulation D specified that a depository
institution could authorize three or less telephone or preauthorized transfers
of funds to be made within a calendar month from an account, without subjecting
the account to the reserve requirement on transaction accounts.
With the
objective of reducing the burdenand costof compliance,
the Board has amended the regulation to provide that the term
"calendar
month" includes any
statement cycle or similar period ofat least four weeks
for purposes of the
three permissible transfers.
At the same time, the Board made a number of technical changes to
Regulation D in the nature of clarifications and corrections of minor errors.
The amendments became effective December 1, 1980.
The Board's notice in this matter is attached.
TITLE 12— BANKS AND BANKING
CHAPTER II— FEDERAL RESERVE SYSTEM
SUBCHAPTER A— BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[REGULATION D]
(Docket No. R-0336)
Part 204— RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
AGENCY: Board of Governors of the Federal Reserve System.
ACTION:
Final rule and technical amendments.
SUMMARY: Die Board of Governors of the Federal Reserve System has amended
its Regulation D— Reserve Requirements of Depository Institutions (12
CFR Part 204) which imposes Federal reserve requirements on depository
institutions that maintain transaction accounts or nonpersonal time
deposits. Under the amendment, a depository institution may permit
a depositor to effect three or less telephone or preauthorized transfers
from an account during a statement cycle or similar period of at least
four weeks without subjecting such account to reserve requirements on
transaction accounts. At present, the relevant period for determining
the permissible number of transfers is a calendar month. This action
will reduce the burden of and cost of compliance with Regulation D.
EFFECTIVE DATE: December 1, 1980.
FOR FURTHER INFORMATION CONTACT: Gilbert T. Schwartz, Assistant General
Counsel (202/452-3625), Paul S. Pilecki, Attorney (202/452-3281), or
Paige Hinebarger, Attorney (202/452-3265), Legal Division, Board of
Governors of the Federal Reserve System, Washington, D.C. 20551.
SUPPLEMENTARY INFORMATION: The Monetary Control Act of 1980 (Title I
of Pub. L. 96-221) ("Act") authorizes the Federal Reserve to impose
reserve requirements solely for the purpose of conducting monetary
policy on all depository institutions that maintain transaction accounts
or nonpersonal time deposits. Depository institutions subject to reserve
requirements include any Federally-insured commercial or savings bank,
or any such bank that is eligible to become insured by the Federal
Deposit Insurance Corporation; any mutual or stock savings bank; any
savings and loan association that is a member of a Federal Home Loan
Bank, insured by, or eligible to apply for insurance with, the Federal
Savings and Loan Insurance Corporation; and any credit union that is
insured by, or eligible to apply for insurance with, the National Credit
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Union Administration Board. The reserve requirements of the Act also
apply to United States branches of foreign banks, to United States
agencies of foreign banks with total worldwide consolidated bank assets
in excess of $1 billion, and to Edge and Agreement Corporations.
The revised Regulation D which became effective on November 13,
1980, implements the provisions of the Act. Under Regulation D,the
definition of "transaction account" includes accounts under the terms
of which, or which by practice of the depository institution, the de
positor is permitted or authorized to make more than three withdrawals
per calendar month for purposes of transferring funds to another account
or for making a payment to a third party by means of preauthorized or
telephone agreement, order or instruction. The Board adopted the threetransfer per calendar month rule so that institutions could continue
to offer services to enable depositors to effect occasional transfers,
particularly in situations such as when a depositor is unable to get
to the depository institution to conduct business or where there are
inadvertent overdrafts in a checking account which a customer wishes
to cover with funds from another account. Recent comments from depository
institutions indicate that account records at many institutions are
maintained on the basis of statement cycles which, although they ap
proximate a one-month period, do not necessarily coincide with a calen
dar month. However, in order to comply with the regulation, institutions
would be required to change automated or operational procedures to
monitor activity from the first day of the month to the last day of
a month. By allowing an institution to adopt a statement cycle or any
other period of at least four weeks, the purpose behind the three transfer
rule is still served. Moreover, the operational costs to an institution
are minimized, since its basic record-keeping cycle can be used as the
appropriate time frame for limiting the number of telephone or preauthor
ized transfers from an account.
The Board believes that this amendment will reduce the burden
to depository institutions of compliance with Regulation D. Consequently,
the Board, for good cause finds that the notice and public procedure
provisions of 5 U.S.C. § 553(b) with regard to this action are impracti
cable and contrary to the public interest. Since the amendment relieves
a regulatory restriction, deferral of the effective date pursuant to
5 U.S.C. S 553(d) is not necessary. In addition, several technical
amendments to Regulation D have been made.
Effective December 1, 1980, pursuant to the Board's authority
under section 19 of the Federal Reserve Act (12 U.S.C. § 461 et seq.),
Regulation D (12 CFR Part 204) is amended as follows:
1.
In Section 204.2(e)(6), the second sentence is amended to
read as set forth below:
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SECTION 204.2— DEFINITIONS
*
(e)
*
*
"Transaction account" *
*
*
*
*
*
*
*
*
*
(6) * * * An account that permits or authorizes more than
three such withdrawals in a calendar month, or statement cycle
(or similar period) of at least four weeks, is a "transaction
account" whether or not more than three such withdrawals
actually are made during such period. * * *
*
*
*
*
*
2.
In section 204.2(b)(1)(vii), by inserting the word "which" after
the words "withdrawal period has expired and" and before the words
"have not been renewed."
3.
In section 204.3(a), the third sentence is revised by deleting
"$5 million" and inserting in its place "$15 million”.
4.
In section 204.3(a), subparagraphs (1)(ii) and (2)(ii) are revised
to read as follows:
SECTION 204.3— COMPUTATION AND MAINTENANCE
(a) Maintenance of required reserves. * * *
(1) United States branches and agencies of foreign banks.
(i)
** *
(ii) * * * if the low reserve tranche cannot be fully
utilized by a single office or by a group of offices
filing a single report of deposits, the unused portion
of the tranche may be assigned to other offices of the
same foreign bank until the amount of the tranche is
exhausted. Ihe foreign bank shall determine this as
signment subject to the restriction that if a portion
of the tranche is assigned to an office in a particular
State, any unused portion must first be assigned to other
offices located within the same State and within the
same Federal Reserve District, that is, to other offices
included on the same aggregated report of deposits.
If necessary in order to avoid under-utilization of the
low reserve tranche, the allocation may be changed at
the beginning of a calendar month. Under other circum
stances, the low reserve tranche may be reallocated at
the beginning of a calendar year.
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(2)
Edge and Agreement Corporations.
(i)
** *
(ii) ** * if the low reserve tranche cannot be fully util
ized by a single office or by a group of offices filing a
single report of deposits, the unused portion of the tranche
may be assigned to other offices of the same institution until
the amount of the tranche is exhausted. An Edge or Agreement
Corporation shall determine this assignment subject to the
restriction that if a portion of the tranche is assigned to
an office in a particular State, any unused portion must first
be assigned to other offices located within the same State
and within the same Federal Reserve District, that is, to
other offices included on the same aggregated report of de
posits. If necessary in order to avoid under-utilization
of the low reserve tranche, the allocation may be changed
at the beginning of a calendar month. Under other circum
stances, the low reserve tranche may be reallocated at the
beginning of a calendar year.
5.
In sections 204.4(b)(1)(ii) and (2)(ii), by deleting the word
"exceeds" and inserting in its place "exceed".
6.
In section 204.4(b)(2), by deleting the parenthesesthat appear
around the phrase "than its required reserves computed using the
reserve ratios in effect on August 31, 1980."
7.
In section 204.4(g)(2)(iv), by deleting the phrase "daily average
vault cash” and inserting "daily average total required reserves”
in both places that it appears.
8.
In section 204.6(b)(1), by deleting the word "on” which appears
after the word "imposed" and before the word "for."
By order of the Board of Governors, December 5, 1980.
(Signed) Theodore E. Allison
Theodore E. Allison
Secretary of the Board
[SEAL]
@FedFRASER